A.

Finance and Accounting

Sales 84% related to human and animal health product
-14% related to environmental health product and services
-2% others
(in dollars)

Indocin and Aldomet are two products that mainly contribute to Mercks profit but are about to
expire.
Clinoril, Mefoxin, Ivemectin and Timoptic are new products released in 1970s.

Research costs Nearly 1,000,000,000
Cost/Per drug approximation 200,000

The research costs they incurred for the newly released drugs cost them nearly 1 billion dollars.
Approximately costing each drug research 200,000 dollars.
Estimated cost to incur for further research
(for river blindness drug)
Below 200,000

The company estimated that it would cost them below 200,000 dollars for formulation of human
drug of ivemectin since it was previously researched for animal drug. They expect that the
research would likely to be very successful.

Before release After release of new products
Year 1970 1969 1978
Sales 2,000,000,000 691,000,000 1,980,000,000
Net
Income
106,000,000 307,000,000
Source of Fund Benefits Probability
Government
Orphan Drug law
Would give them tax benefits
And 7 year exclusive market
rights
Unlikely
International Organizations Donations Possible

The Government orphan law, that is expected to be passed, applies only to population of
200,000 and below. In the case of river blindness, millions of people are affected so the
company must not depend on the possibility that the government may fund them. Instead, they
may consider the international organizations willing to help them fund the drug.